PepsiCo price hikes lead to strong third-quarter earnings

Published

7 months ago

October 13, 2023

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Price hikes lifted PepsiCo’s profits in the third quarter, but the company says those increases are likely to moderate in the coming year.

Pepsi raised prices 11% in the July-September period, the seventh straight quarter that the Purchase, New York, company has increased prices by double-digits.

The higher prices took a toll on demand, with sales volumes down 2.5%.

PepsiCo said some of that volume decline is strategic.

The company said it has been shrinking package sizes to meet consumer demand for convenience and portion control.

Units are growing much faster than volume, PepsiCo Chairman and CEO Ramon Laguarta said Tuesday in a conference call with investors.

But there is also some consumer pushback on prices. Consumers are looking for value and, in some cases, are trading down to cheaper stores.

I do think that we see the consumer right now being more selective, PepsiCo’s Chief Financial Officer Hugh Johnston said Tuesday on a conference call with investors.

Still, Johnston said convenience store sales and food service sales, which usually weaken in times of high consumer stress, are strong.

Johnston said Pepsi continues to see higher prices for commodities like grain and cooking oil.

In 2024, Pepsi expects inflation to be slightly higher than the 2% to 3% it was accustomed to before the pandemic.

Consumers should expect to see price increases roughly in line with inflation, he said.

Pepsi is watching the growing use of weight loss drugs like Ozempic, but so far their impact on the business has been negligible, Laguarta said.

They could be outweighed by other trends, including rising incomes in many countries and the growing popularity of snacking in place of meals.

Were seeing a lot of tailwinds that will continue to drive our categories, he said.

Pepsi shares were up 1.5% in morning trading.

In the third quarter, Frito-Lay North America sales volumes dropped 0.5% during the July-September period as net prices rose 8%.

North American beverage sales volumes dropped 6% as prices rose 12%.

Sales volumes in Europe were flat. Sales volumes in Latin America dropped 5%.

Net pricing includes price hikes as well as changes in the mix of products sold and smaller package sizes.

In prepared remarks Tuesday, PepsiCo said consumers are gravitating toward smaller packages for convenience and portion control.

Net revenue was $23.4 billion, the company said Tuesday. That was in line with Wall Streets expectations, according to analysts polled by FactSet.

Net income for Pepsi rose 14% to $3.1 billion, or $2.24 per share.

That beat the $2.15 per share that analysts had forecast.

Pepsi now expects its full-year earnings per share to increase 13%, up from previous projections of 12%, due to the strength of its sales and cost-cutting efforts.

Sports

Stars ‘steal one,’ revive series hopes with OT win

Published

2 hours ago

April 28, 2024

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Stars 'steal one,' revive series hopes with OT win

Ryan S. Clark, NHL reporterApr 28, 2024, 03:58 AM ET
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After falling into a 2-0 series hole while losing six straight and nine of their past 11 games to the Vegas Golden Knights, the Dallas Stars had to do something in Game 3.

And they did. The Stars snapped their losing skid to the defending Stanley Cup champions, with 20-year-old forward Wyatt Johnston scoring twice, including the winning goal in their 3-2 overtime win Saturday in the Western Conference quarterfinals at T-Mobile Arena.

“We knew the situation coming into Vegas,” said Stars center Tyler Seguin, who finished with an assist. “We know these guys are the champs from last year, and we know how good they are on home ice. … We knew we had to come in here, we had to steal one no matter. Now, we want to steal two.”

Coming close but not being close enough to win games had been the narrative for the Stars entering Game 3.

They opened Game 1 with a 4-3 loss and were within striking distance in Game 2 before an empty-netter from Jack Eichel late in the third period created extra separation in a 3-1 defeat.

Game 3 saw Dallas find its footing early. Johnston scored the opening goal near the halfway point of the first period before Miro Heiskanen doubled the lead to 2-0 a little more than five minutes into the second period.

Having a two-goal lead, however, was short-lived. The Golden Knights tied the score on a pair of second-period goals from Brayden McNabb and Eichel.

Both teams struggled to come up with the winning goal in the third and in overtime. Stars goaltender Jake Oettinger finished with 32 saves and a .941 save percentage for what was his strongest performance in the postseason.

Oettinger’s counterpart, Logan Thompson, was one of the main reasons why the Golden Knights even reached overtime. Johnston’s first goal along with Heiskanen’s salvo that gave the Stars a 2-0 advantage was the product of an attack that went from struggling to find consistency in the first two games of the series to one that showed why the Stars are among the teams that could potentially dethrone the Golden Knights this postseason.

Through the first two games of this series, Thompson had faced 50 shots. The Stars already had 33 shots by the end of the second period before finishing with 46 shots, with Thompson stopping 43 of them.

Johnston was responsible for a game-high eight shots, with his final being the winner that he snuck beneath the crossbar and over Thompson’s shoulder from a side angle to bring the Stars within a game of tying the series.

“I tried a couple low, and it didn’t work,” said Johnston, who led the Stars with 33 goals in the regular season. “So, I tried to throw one up high and I’m lucky enough it worked.”

Stars coach Peter DeBoer reiterated afterward that his team had to be the more desperate club Saturday night.

DeBoer’s logic was simple. The Golden Knights were still going to have a series lead no matter what happened in Game 3. The Stars, on the other hand, had to find a way to avoid going back to Dallas trailing 3-0.

Getting off to an early start. Finding ways to constantly get shots. Making sure the Golden Knights were the ones who struggled to find cohesion at times. These are the details that allowed the Stars to win Saturday, and they’re also the attributes DeBoer said proves the team has shown gradual improvement since the start of the playoffs.

“What I do like about our game is that our game’s building,” DeBoer said. “Game 2 was better than Game 1. Game 3 was better than Game 2. That’s a great sign for me on our group.”

World

UK to develop hypersonic missiles to catch up with China and Russia by 2030 – report

Published

2 hours ago

April 28, 2024

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UK to develop hypersonic missiles to catch up with China and Russia by 2030 - report

Britain plans to equip its armed forces with a homegrown hypersonic cruise missile by the end of the decade, according to a report.

Military chiefs are under pressure to catch up with China, Russia and the US by developing a weapon capable of flying at speeds higher than Mach 5 – five times the speed of sound, according to The Sunday Telegraph.

The Ministry of Defence wants the missile to be designed and built in the UK and to enter service by 2030.

Plans are at an early stage, the newspaper reported, although there is no decision on whether the missile will be launched from land, sea or air.

It comes after Prime Minister Rishi Sunak pledged to spend 2.5% of gross domestic product on defence by 2030.

Ballistic weapons can also reach hypersonic speeds but the difference is in manoeuvrability – ballistic weapons generally have fixed paths but the path of a hypersonic weapon can be changed after launch, making it difficult to destroy.

The US, Russia and China are the main players in the hypersonic weapons race but other countries, such as North Korea, claim to have tested hypersonic weapons.

The development of hypersonic capabilities is part of Pillar Two of AUKUS – a defence and security pact between the UK, Australia and the US.

Last month the US tested a hypersonic cruise missile on an atoll in the Marshall Islands in a message to its rival in the Pacific – China. It is the latest in a number of hypersonic weapons tests the country has completed in recent years.

A spokesperson for the MoD would not comment in detail on the development of Britain’s hypersonic missile capability, citing national security, but confirmed “hypersonic technologies to further develop UK sovereign advanced capabilities” were being pursued.

“We continue to invest in our equipment to meet current and future threats,” they added.